Saturday, November 28, 2009

The arrogance and dishonesty is almost unbelievable. Bonuses paid for driving a company into bankruptcy. Unless, of course, you believe, like Molly does, that managers are a parasitic class who contribute nothing to the production of goods and services and who have replaced the nominal owners of most companies (the shareholders represented by diversified stock in RRSPs and pension funds) as the real "ruling class". If you believe as Molly does then looting a bankrupt corporation is pretty well much par for the course, and thus I am not surprised by the following. Merely disgusted. First, from the Toronto Star is the mainsteam media report on what has happened.
Ex-Nortel staff slam executive bonuses
Payment in leaked file to keep bosses on board:
Iain Marlow Business Reporter
Nortel Networks Corp. pensioners reacted with disgust on Friday to reports of new lavish bonuses for the company's top executives.

It was yet another blow to Nortel's distressed pensioners, retirees and long-term disabled former employees, who have dealt with financial uncertainty since the former Canadian tech darling declared bankruptcy in January.

"It seems so aberrant, in terms of the executive of the company awarding themselves really, really rich pay raises for doing the job of taking the company apart," said Tony Marsh, who retired from Nortel in 2000 after 30 years.

"Those of us who built the company up, into arguably the world's No. 1 telecom company, could never have dreamed of such riches," Marsh added.

An internal Nortel file "outlines a new compensation scheme for 72 Nortel executives that will see them get a total of $7.5 million U.S. on top of their current salaries in 2009," according to CBC News.

The company has argued that bonuses are necessary to keep executives aboard what is essentially a sinking ship following Nortel's filing for bankruptcy protection and the subsequent selling off of the company's assets. ( Molly would suggest the least educated, experienced and effective accountants in the whole country of Canada as better people "on board" than the past Nortel executives. Wanna argue ? )

Nortel would not comment on details of the plan. It issued a statement saying: "As Nortel works through the highly complex tasks of this restructuring, it is critical to have the right specialist resources in place ... Any steps taken around these individuals has been within the context of a previously approved compensation plan, taken in consultation with the creditor committees, external legal counsel and the Canadian Monitor."

Earlier, former CEO Mike Zafirovski claimed $12.3 million (U.S.) for back pay and bonuses. In March, some 100 executives were awarded $45 million in retention bonuses.

The company's divisions are being auctioned off in a process dragged out by bankruptcy court approvals. Retirees are worried that when Nortel's various global divisions are entirely sold off, they will be stuck with even less than they are now, which is not much, Marsh said.
Here's what the Canadian Auto Workers (CAW) who have the misfortune of representing the Nortel workers and the pensioners/disabled workers have to say about the subject.

CAW Condemns Corporate Bonuses at Nortel, while Retirees and Former Workers Left for Broke:
November 27, 2009, 10:55 AM EST
CAW President Ken Lewenza is denouncing the news of more corporate bonuses and salary increases at Nortel Networks Corp, while workers are still fighting to get their due severance, termination pay and pensions.

"This is the worst kind of abuse of corporate power - laying off workers and leaving them with nothing while the executives who drove the company into the ground fill their pockets," said CAW President Ken Lewenza. "This is deplorable and must be stopped."

Lewenza criticized yesterday's Ontario court ruling that Nortel retirees and former employees will not receive the severance or termination pay as set out in their separation packages.

"This is another example of why we need urgent changes to the bankruptcy laws in this country," said Lewenza. "Companies like Nortel can go into bankruptcy protection and eliminate their financial responsibilities towards former workers. In the case of Nortel, it is even more offensive since they are still paying out huge corporate bonuses, while completely ripping off retired or laid-off workers."

"It is exactly this kind of manipulation of the system that plunged the world economy into crisis last fall - it's truly repugnant that we've learned nothing from this experience."

Lewenza said that the union will continue to fight on behalf of the current and former Nortel workers. The union will be ramping up pressure on government to bring about necessary changes to the bankruptcy legislation, which currently sees workers bumped to the end of the line when companies go into bankruptcy. The union is also pressing for a national guaranteed pension fund which would help cover the pensions of workers whose employers go into bankruptcy protection or bankrupt.

In the company's heyday in the mid 1980s, the CAW represented approximately 5,000 Nortel workers in five locations.

The story of a new round of corporate bonuses at Nortel surfaced yesterday through a report by the CBC, who obtained the internal corporate document.

No comments: